SABB, Alawwal merger to help RBS find buyer for Saudi stake

S&P says Saudi merger deal will free up capital that RBS holds against the Alawwal stake and help pave the way for the privatisation of RBS

By Bernd Debusmann Jr

Thu 24 May 2018 01:50 PM

A combination of Saudi British Bank and Alawwal Bank will help Royal Bank of Scotland (RBS) Group PLC sell its stake in Alawwal Bank, according to S&P Global Market Intelligence.

RBS, which has an effective 40 percent of Alawwal Bank, will have a 5 percent stake in the combination of Saudi British and Alawwal, which, according to S&P, will make it easier to find a buyer.

Additionally, the deal will free up capital that RBS holds against the Alawwal stake and help pave the way for the privatisation of RBS.

Saudi British Bank will acquire Alawwal in a transaction in which it is valued at $4.95 billion. Once combined, the company will have assets of $72.3 billion as of March 31, according to S&P calculations.

The merger marks the first of two Saudi Banks since Saudi American Bank and United Saudi Bank came together to form Samba Financial Group in 1999. By the end of 2017, Samba has assets of $60.6 billion.

RBS for years has been trying to sell its stake in Alawwal, which it acquired as part of its acquisition of ABN Amro Bank NV. Currently, the Edinburg-based firm is cutting its global investment-banking operations to focus on consumer and commercial lending after a UK-government bailout.